He won the 22 January 2006 presidential election and was re-elected on 23 January 2011 for a second five-year term. During his second term, his perceived disregard of the results of the 2015 election most likely contributed to him having the lowest level of popularity for a Portuguese President since the Carnation Revolution.

Cavaco Silva was initially an undistinguished student. As a 13-year-old, he flunked at the 3rd grade of the Commercial School, and his grandfather put him working on the farm as a punishment.[1] After returning to school, Cavaco Silva went on to become an accomplished student. Cavaco Silva then went to Lisbon, where he took a vocational education course in accounting from "Instituto Comercial de Lisboa" (Instituto Superior de Contabilidade e Administração de Lisboa (ISCAL), today) in 1959. In parallel, he was admitted for university education at the Instituto Superior de Ciências Económicas e Financeiras de Lisboa (ISCEF) of the Technical University of Lisbon (UTL) (currently the Instituto Superior de Economia e Gestão (ISEG) of the Technical University of Lisbon), and obtained in 1963, with distinction, a degree in economics and finance (he scored a mark of 16 out of 20). While studying in Lisbon, Cavaco Silva was an athlete of CDULathletics department from 1958 to 1963.[2]

He only became active in politics after the Carnation Revolution of 25 April 1974, later that year joining the then PPD, a political party headed by Francisco Sá Carneiro. Cavaco Silva, was appointed Minister of Finance by Prime Minister Francisco Sá Carneiro in 1980. He gained a reputation as an economic liberal, gradually dismantling regulations inhibiting free enterprise. He refused to serve in the Central Block coalition of Socialists and Social Democrats (PSD) that governed from 1983 to 1985, and his election to the leadership of the PSD on 2 June 1985, portended the end of the coalition.

The 1985 legislative election was complicated by the arrival of a new political party, the Democratic Renewal Party (PRD), which had been formed by the supporters of the President, António Ramalho Eanes. In the 250-member Assembly of the Republic, the nation's legislature, the PRD won 45 seats – at the expense of every party except Cavaco Silva's PSD. Despite winning less than 30 percent of the popular vote, the PSD was the only traditional political party not to suffer substantial losses. Its 88 seats, in fact, represented a gain of 13 over the previous election. Accordingly, Cavaco Silva became Prime Minister on 6 November 1985.

Tax cuts and economic deregulation and the arrival of EU funds spurred several years of uninterrupted economic growth, which increased Cavaco Silva's popularity. He was hampered, however, by heading a minority government. On most issues, his Social Democrats could rely on the 22 votes of the Social and Democratic Center Party (CDS), but the two parties' combined 110 votes fell 16 short of a parliamentary majority. The Socialists and Communists held 57 and 38 seats respectively; Cavaco Silva could govern if the 45 members of the PRD, who held the balance of power, abstained, as they frequently did.

In 1987, however, the PRD withdrew its tacit support, and a parliamentary vote of no confidence forced President Mário Soares to call an early election. The results of the election stunned even the most optimistic of Cavaco Silva's supporters. His Social Democrat party captured 50.2 percent of the popular vote and 148 of the 250 seats in the legislature. Far behind were the Socialists, with only 60 seats, and the Communists, with 31. The CDS and the PRD were virtually wiped out, left with only four and seven seats, respectively. This was the first time since the 1974 revolution that a single party had won an outright majority in the national parliament.[6]

Although the occurrence of economic growth and a public debt relatively well-contained as a result of the number of civil servants was increased from 485,368 in 1988 to 509,732 in 1991, which was a much lower increase than that which took place in the following years until 2011 marked by irrational and unsustainable State employment, from 1988 to 1993, during the government cabinets led by Cavaco Silva, the Portuguese economy was radically changed. As a result, there was a sharp and rapid decrease in the output of tradable goods and a rise of the importance of the non-tradable goods sector in the Portuguese economy.[7]

The 1991 election was another triumph for Cavaco Silva; it yielded a majority even larger (50.6 percent) than the one of four years earlier. However, the 1993 European economic crisis, sparking a high unemployment rate, and the country's mistrust of long-spanning governments, eroded his popularity. He decided not to contest the 1995 election, and the PSD, lacking a leader of his stature, lost 48 seats and the election.

Cavaco Silva contested the 1996 presidential election, but was defeated by the Mayor of Lisbon, Jorge Sampaio, the Socialist candidate. Retiring from politics, he served for several years as an advisor to the board of the Banco de Portugal (Bank of Portugal), but retired from this position in 2004. He then became a full professor at the School of Economics and Management of the Catholic University of Portugal, where he taught the undergraduate and MBA programs.

On 20 October 2005, Cavaco Silva announced his candidacy for the 2006 presidential election. He was elected President of the Republic on 22 January 2006 with 50.6% of votes cast, avoiding a run-off. He is the first elected center-right President in Portugal since 1974. He is also the second former Prime Minister to be elected President, following in the footsteps of Mário Soares.

Cavaco Silva's term was initially marked by a mutual understanding with the government led by Socialist José Sócrates, which he referred to as "strategic co-operation". He also avidly encouraged the suppression of partisan differences between the political parties in parliament, as a means of working towards the greater national good, despite the absolute majority held by the Socialist Party. This led to several controversies, with some branding Cavaco Silva, a practicing Roman Catholic and a self-described believer in Fátimaapparitions, as a traitor to the center-right and to some of his own personal beliefs. Nevertheless, this seems to have been a misconception with respect to his presidency. In effect, he resorted to his veto power more than Mário Soares, who as a President was largely seen as too conflicting with the Government, in the latter's first term.

The most controversial moment of his presidency was when the Assembly of the Republic passed a bill for the holding of a pre-legislative referendum on the legalization of abortion in Portugal without any restrictions in the 10 first weeks of pregnancy. After the parliamentary approval of the bill summoning the referendum, Cavaco Silva referred the matter to the Portuguese Constitutional Court, which declared both the proposed legalization and the referendum constitutional by a narrow 7-6 margin. Cavaco Silva, who could still have vetoed the referendum bill, decided to sign it into law despite pressure from some pro-life sectors, and thus allowed the referendum. The majority of the Portuguese electorate abstained from the referendum, but the vote for legalization prevailed among those who chose to cast their ballot.

Cavaco Silva was reelected President of Portugal on 23 January 2011 with 52,92% of the vote, and he took office for his second five-year term on 9 March 2011. He is regarded as the most unpopular President since the abolition of Estado Novo in 1974.[citation needed]

At the general election on 4 October 2015 to the Assembly of the Republic, the unicameral Portuguese parliament, the right-wing government of Prime Minister Pedro Passos Coelho lost its majority, with center-left and far-left opposition parties gaining more than half of the seats. As Coelho's own Social Democratic Party remained the largest in parliament, and still had the support of the much smaller CDS – People's Party, Cavaco Silva allowed Coelho to continue as prime minister, giving him the first chance to form a new government. Coelho was unable to find any new partners and was widely expected to stand down, but on 22 October Cavaco Silva invited him to form a new government, even if it were a minority government. On 24 October Cavaco Silva explained his thinking:[9]

“

In 40 years of democracy, no government in Portugal has ever depended on the support of anti-European forces, that is to say forces that campaigned to abrogate the Lisbon Treaty, the Fiscal Compact, the Growth and Stability Pact, as well as to dismantle monetary union and take Portugal out of the euro, in addition to wanting the dissolution of NATO.[9]

”

Antonio Costa, leader of the Socialist Party, called this a grave mistake and added "It is unacceptable to usurp the exclusive powers of parliament. The Socialists will not take lessons from Professor Cavaco Silva on the defence of our democracy." The Green politician Rui Tavares commented "The president has created a constitutional crisis. He is saying that he will never allow the formation of a government containing Leftists and Communists. People are amazed by what has happened." The opposition parties quickly announced their intention of bringing down the new government in a motion of rejection.[9]

Eventually, Passos Coelho's government fell on a motion of no confidence, and the President appointed Antonio Costa, the leader of the Socialists, as Prime Minister in his place.

Cavaco Silva made state visits to countries in Europe, Africa, Asia and the Americas. In his first year in office, he visited the former Portuguese colonies of Cape Verde and Guinea Bissau, and met with Portuguese troops in Bosnia and Kosovo. In September 2006, he visited Portugal's only neighbour, Spain.[16]